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Buying yield (4.8%) without the risk of the dollar
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Japan Bull Market Checklist
Strong Currency...check
Low Exposure to Sub-Prime...check
High savings rate..check
Banks flushed with cash..check
Ability to buy distressed U.S assets..check
Deflationary economy showing sings of ending...check
Japan market ready for takeoff!!
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What I liked about DNL is that it doesn't have the big names like Toyota,Matshushita all of which are well valued as the overseas earnings are factored into their stock price.The Japanese stock market is going to be led by companies that are capable of catering to domestic consumption since the whole world would be slowing thereby hurting exports.
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Japanese stocks are historically cheap right now. In 2007, the Nekkei turned in its first yearly loss since 2002, at the same time their neighbors in Asia were posting double digit gains. By one estimate, 40% of the Topix companies have a price/book value ratio of under 1.0, which means they're trading for less than the value of their assets! Them's bargains in yonder hills!
Much of the decline in the Nekkei can be attributed to the recent rise of the yen, which sucks the value of earnings from foreign markets when they're converted to the foreign market's currency. If the yen stabilizes against the dollar, some of that value will return to shareholders.
Institutional investors are sniffing around, looking for new places to park cash. WSJ reports that the Qatar Investment Authority, with over $60-billion under management, is looking to buy Japanese shares, as is the China investment Corp., with over $200-billion. A rising tide of investment dollars will float a lot of keels.
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